Business Page – July 1st,
2002

Ansa McAl - Top Regional Conglomerate

Introduction

Trinidad & Tobago
based Ansa McAl Limited was the star performer among Caricom conglomerates
in 2001. This is according to a recent publication of Ernst & Young
Caribbean (E&Y) ‘Performance 2002’ which presents an analysis
of the 2001 published financial results of the public companies traded on
the Securities Exchange of Barbados, the Trinidad & Tobago Stock
Exchange and where audited financial statements were available, on the
Jamaican Stock Exchange as well. While acknowledging that performance is
shaped by financial as well as non-financial metrics, the analysis is based
entirely on objective indicators that are publicly available, without any
attempt to interview company officials to gather additional information. The
criteria adopted are used to assess all the companies and the publication
presents the results both by country and regionally. Guyana is not included
since it does not have a Stock Exchange and no reliable share price is
available.

The scoring system ranks
each company under each of nine Performance criteria namely: Shareholders
Funds; Turnover; Profitability; Earnings Per Share; Dividend Yield; Dividend
Cover; Return on Capital Employed; Return on Common Equity and Average Share
Price. Helpfully, the publication includes an overview of the economies and
the highlights of the operations of the Stock Exchanges in the three
countries as well as aglossary
of terms to facilitate a better understanding of the concepts and terms used
in the study.

The companies featured
in the analysis were categorised according to their industry classifications
on the respective stock exchanges. The five industries that were featured in
the analysis were:

-Communication and Utilities

-Conglomerates

-Financial and Non Banking Financial Institutions

-Manufacturing

-Retail & Distribution

This selection basis
rewards companies that performed best in 2001 relative to their industry
peers, using specific Performance Measures. The methodology for selection
was based on ranking industry participants’ absolute results in 2001, in
each of the nine Performance criteria. The company with the highest overall
score emerged as the top performer in the specific industry.

Economic performance

The Barbados economy
experienced a contraction in 2001. Real output declined by 2.8%, in contrast
to an expansion of 3% in 2000, reflecting contractions in both the traded
and non-traded sectors. Activity in the traded sectors fell by approximately
6.8% as all sub-sectors registered significant decreases.

Trinidad and Tobago’s
economy performed favorably in 2001. Gross Domestic Product was up 3.5% from
2000 and the rate of inflation increased to a level of 5.5%. The Jamaican
economy recorded its second consecutive year of real growth with a growth
rate of 1.7% while inflation was recorded at a rate of 8.7%, marking the
fifth consecutive year of single digit inflation.

Stock
Market

Trading activity on the
Barbados Stock Exchange was challenging with the Index falling by 4.0%
during the year. Eleven companies registered price declines during the year;
nine experienced increases; two remained firm and three new companies were
listed.

There was much
uncertainty on the TTSE with increasing political challenges facing that
country. The All Trinidad and Tobago Index showed virtually no change for
the year beginning at 492.5652 and ending at 492.0424 while the Composite
Index declined from 441.5042 at the beginning of the year to 434.1912 at the
end of the year, a decline of 1.66%.

On the other hand, the
Jamaica Stock Exchange Index increased by 17.1% for the year. Other
performance indicators which registered growth were the volume of stocks
traded which increased by 19.2% to 714.7 million; the total value of stock
traded was up 6.3% to reach $3.4 billion; market capitalisation increased by
38.9% to $222.0 billion and the number of transactions increased by 594 to
20,853.

The Winners

The companies showing
the best performance in 2001 within the industries analysed across the
region are as follows:

INDUSTRY

COMPANY

COUNTRY

Communications
& Utilities

Cable
& Wireless BARTEL

Barbados

Conglomerates

Ansa
McAl

Trinidad

Financial
and Non Banking

Financial
Institutions

CIBC

Barbados

Manufacturing

Carreras

Jamaica

Retail
& Distribution

Agostini

Trinidad

Communications &
Utilities

The Cable and Wireless
Companies dominated the analysis winning the first three rating positions.
The Utilities companies due to the sheer size outranked the smaller
communications companies. In the communications section Trinidad Publishing
outperformed the other companies, coming in 5th overall after
Utilities. Cable & Wireless BARTEL outperformed its peers to win the
overall prize.

Conglomerates

The
variance in performance between the three top companies was very narrow with
Ansa McAl just marginally outperforming Neal & Massy Holdings Limited.In this category, the top two positions
went to T&T companies followed by Barbados and then Jamaica.

The Manufacturing Sector

Interestingly, the
manufacturing sector had the largest number (18) of publicly traded
companies in the three countries. Carreras Group Limited of Jamaica, a
subsidiary of Rothmans the cigarette people, emerged the winner in this
industry with Lever and West Indian Tobacco Company Limited from Trinidad in
second and third place respectively.

Financial and Non-Banking
Financial Institutions

Owing to the small
number of companies involved and the similarity in the nature of their
activities, these two categories were merged for purposes of the analysis.
CIBC West Indian Limited came out on top ahead of Royal bank of Trinidad
& Tobago with Bank of Nova Scotia and Republic Bank Limited tied for the
next slot. CIBC has announced that it would be combining its resources with
Barclays Bank plc in the region which will result in a more than doubling of
its current asset base.

Retail,
Trading and Distribution

A.S.Bryden & Sons
(Barbados) Limited, with sales of US$49Mn. which doubled its Net Income and
Earnings Per Share (EPS) came out top of this group ahead of Courts Barbados
and Prestige Holdings of T&T followed by Courts Jamaica.

Conclusion

This study offers a
useful benchmarking tool for our domestic public companies which can benefit
from some careful self-examination against the operations of their
counterparts from the region. Our entrepreneurs are still too inward-looking
and seem not to understand their role and the expectations of shareholders.
None of the Annual Reports reviewed in Business Page has bothered to address
value which is the primary concern of shareholders.

Electronic copies ofthe study are available for purchase.

Three
cheers for DDL

Whether you are a
drinker or not please salute DDL which has rescheduled its Annual General
Meeting from June 28 to Friday July 19, as a result of its late circulation
of the Annual Report which was to be presented to its shareholders at the
meeting.